LOS ANGELES -- Local officials in the greater Phoenix metropolitan area are negotiating with the Resolution Trust Corp. due to concern over the RTC's failure to make certain assessment payments that secure bond issues.

Although officials declined to comment on the negotiations, one city executive confirmed that meetings are being held with RTC representatives to discuss the corporation's policy on assessment payments.

The City of Chandler, Ariz., is most active in addressing the issue, primarily because it has stepped in and covered about $50,000 of interest and principal payments to protect bonds affected by RTC non-payments.

Barry Webber, management services director of Chandler, stressed last week that there is "no default anticipated" on the city's improvement district bonds because of the RTC matter.

He also noted that the missed payments involve tiny amounts. Chandler has about $46 million of improvement district assessment bonds outstanding, Mr. Webber said, and the trust corporation's missed payments affect only principal totaling $276,000.

Mr. Webber said he could not comment further on the matter, citing the ongoing negotiations with the RTC. Chandler officials have honored a request by the trust corporation to hold off on foreclosure proceedings against the properties in default.

The trust corporation was formed by the federal government to liquidate the assets of troubled savings and loan institutions. As part of this process, it has acquired property in Chandler and elsewhere that is situated inside improvement districts. Property owners in those districts -- which were created to pay for such items as water and sewer lines -- make semiannual assessment payments to secure bonds that financed the improvements.

The missed RTC payments affect eight properties in Chandler, according to Mr. Webber. The city in July faces another interest payment totaling $22,000 on those properties.

Richard Mitchell, a partner at the law firm of O'Connor, Cavanagh, Anderson, Westover, Killingsworth & Beshears in Phoenix, has examined the issue closely because his firm served as bond counsel on the transactions.

Mr. Mitchell did not return phone calls. But in a recent interview in The Phoenix Business Journal, Mr. Mitchell outlined various concerns lawyers have about the RTC nonpayments.

Mr. Mitchell expressed a general worry that the RTC might be approaching assessments without clear and consistent guidelines, leading to a situation where only some payments are made. Lawyers also are concerned that the trust corporation may have the power to liquidate property, even if a city files an assessment lien to protect its interest.

Local officials contend the RTC should honor the assessments, especially because they pay for improvements that gave the property value in the first place and also improve its marketability.

Mr. Mitchell said in the Business Journal article that lawyers are trying to figure out where the trust corporation is "coming from and if there is some way we can solve the problem in a manner that is satisfactory to cities, but also satisfactory to the RTC."

Some of the problem with inconsistency may stem from the fact that various law firms apparently represent the RTC throughout the state, according to Mr. Mitchell's comments in the article.

The trust corporation's policy is important because improvement districts have been used widely throughout the Phoenix metroplitan area, Mr. Mitchell added.

Fred Rosenfeld, a partner of the law firm of Gust, Rosenfeld & Henderson in Phoenix, said Friday that the problem with missed assessment payments by the RTC "has to be kept in proportion." Based on his experience with the RTC, "for the most part they've been paying" assessments, Mr. Rosenfeld said. He said he could not comment further because he has not examined the issue closely.

An RTC spokesman was quoted in the Business Journal article as saying the corporation has an unwritten general policy of paying assessments as they come due but not paying assessments that were in arrears when it inherited the property.

The RTC could not be reached for comment on Friday.

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